A PLATFORM FOR THOUGHT AND HUMANITY "In generosity and helping others, be like a river. In compassion and grace, be like the sun. In concealing other's faults, be like the night. In anger and fury, be like dead. In modesty and humility, be like the earth. In tolerance, be like the sea. Either appear as you are, or be as you appear" (Mevlana Rumi) "Wisdom is not a product of schooling but of the life-long attempt to acquire it" (Albert Einstein) (Contact Address: reflectioncafe@gmail.com)

Friday, May 27, 2005

The Euro and the World Economy

C. Fred BergstenDirector, Institute for International Economics.Presented at a conference on The Eurosystem, the Union and Beyond:The Single Currency and Implications for GovernanceAn ECB Colloquium Held in Honor of Tommaso Padoa-SchioppaEuropean Central Bank, Frankfurt am Main, Germany, April 27 2005.

The dollar has been the world's dominant currency for over a century chiefly because it had no competition, but the advent of the euro changes that situation dramatically. The euro will not realize its full international potential, however, until Euroland countries fully integrate their capital markets, speak with a single voice on all major economic and financial issues, and strengthen their economic performance. The exchange rate of the euro is in any event likely to rise considerably further over the coming months and years. But as a result of the further dollar depreciation that is needed to help reduce the huge US current account deficit, the euro will continue to experience a disproportionate share of global currency appreciation if Asian countries continue to resist adjustment of their own currencies, the inevitable portfolio diversification from dollars to euros stemming from the latter's growing global role, and the likely shrinking of the US-European growth differential (due more to a US slowdown than a European speedup). To achieve a more constructive outcome, the United States must reduce its budget deficit, the United States and Euroland must insist that the International Monetary Fund enforce its rules against currency manipulation in Asia, and Europe and Japan must stimulate the expansion of domestic demand in their economies. Additionally, Euroland and the United States should create a new "finance G-2" to manage the world's two key currencies and prevent destabilizing currency swings.

Love is Reckless

LOVE IS RECKLESS; not reason.Reason seeks a profit.Love comes on strong,consuming herself, unabashed.Yet, in the midst of suffering,Love proceeds like a millstone,hard surfaced and straightforward.Having died of self-interest,she risks everything and asks for nothing.Love gambles away every gift God bestows.Without cause God gave us Being;without cause, give it back again.MEVLANA RUMI